Business

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  • (2012) Ara, Tomohiro
    Thesis
    This dissertation consists of three essays on "new new" trade theory, which sheds more light on firm-level empirical facts in international trade. In particular, l develop simple models that focus on both the positive and normative aspects of vertical specialization where upstream and downstream firms bargain over contracts for intermediate inputs. The first essay explores the positive features of international trade by questioning why the fraction of firms that export varies with countries' comparative advantage. To answer this question, I develop a general-equilibrium Ricardian model of North-South trade in which both institutional quality and firm heterogeneity play an important role in determining trade patterns. Because of contractual frictions that vary across countries and sectors, North with better institutions produces relatively more in the sectors where production is more institutionally dependent. In addition, institution‐induced comparative advantage makes it relatively easier for Northern heterogeneous firms to incur export costs in the more contract-dependent sectors, thereby leading to the higher exporters' percentage. The second essay investigates the normative and policy implications of offshoring by addressing how the bargaining power of firms affects trade policy. We show that, if the number of firms is fixed, the welfare-maximizing Home tariff rate is strictly decreasing in the bargaining power of Home firms, and that an increase in Home firms' bargaining power can raise Foreign profits. In an endogenous market structure setting with free entry and matching, the relationship between the tariff and bargaining power is U-shaped (inverted U-shaped) if the demand function is strictly concave (convex), whereas free trade is optimal irrespective of the bargaining power if the demand function is linear. The third essay returns to the positive side of international trade, developing a North-South trade model in which the firm's organizational form for input acquisition in global sourcing is endogenously determined by sectoral characteristics. We show that industries in the economy are divided into seven classes of sectors in terms of the prevalence of organizational forms, Specifically, the coexistence of different organizational forms is less likely as the sectoral input intensity is more extreme, thereby letting intra-industry heterogeneity be less relevant to organizational choices.

  • (2012) Tubb, Adeline
    Thesis
    This thesis contains three essays exploring demographic and technological challenges to environmental sustainability. Chapter 1 theoretically and empirically investigates the impact on government environmental expenditure of the divergent policy preferences of young and old generations, taking into account two distinct though interrelated aspects of population ageing: increased longevity and a rise in the proportion of individuals aged over 65 years. An implication of the overlapping generations model presented in this chapter is that a heightened preference for environmental care expenditure among the young dominates the preference of the older generation for higher transfer payments and lower environmental expenditure. To test this theoretical result, I employ a panel data set containing observations on a diverse set of 47 countries. Empirical results provide clear support for the theoretical hypothesis that the proportion of individuals over the age of 65 negatively impacts public spending on the environment, though this effect is overwhelmed by the statistically significant positive effect on environmental expenditure of both longevity and the proportion of the population aged between 15 and 64 years. Chapters 2 and 3 utilise an OECD survey of over 4000 manufacturing facilities to focus on technological facets of environmental sustainability. Chapter 2 investigates the drivers of environmental R&D at the facility level and whether investments in R&D at the industry level are complementary to facility specific investments in green R&D. Broad-based industry R&D intensity and facility R&D intensity are shown to mutually reinforce one another, positively and significantly impacting the proportion of R&D expenditure that a facility devotes to environmental R&D. This is suggestive of positive technology spillovers at the facility level. Chapter 3 explores whether environmental R&D expenditure enhances facility profitability and whether the profitability enhancing effect of environmental R&D is attributable to green innovation. Key among the empirical results is that the proportion of R&D expenditure that a facility devotes to environmental R&D positively and significantly impacts facility profitability. Intriguingly however, this result is not driven by contemporaneous environmental innovation. Rather, it may be that by enhancing the green credentials of a facility, environmental R&D serves to elicit preferential treatment from key stakeholders.

  • (2012) Hoang, Van Phuong
    Thesis
    This thesis consists of three essays covering some of the most important aspects of migration and entrepreneurship in Vietnam, as well as in low- and middle-income countries by using some unique datasets and empirical methods. The three essays have uncovered some key factors that determine the propensity of entrepreurship in Vietnam and in low- and middle- income countries, and the key determinants of labor market outcomes of internal migrants in Vietnam. Chapter 2 investigates the effect of Multinational Enterprises (MNEs) and the regulatory variables on indigenous entrepreneurship in a sample of low-and middle-income countries. Using a cross-countries micro dataset from Global Entrepreneurship Monitor (GEM), and a set of country level regulatory variables and the presence of MNEs. This study finds that MNEs reduce the propensity of entrepreneurial activities, and a more enabling business environment encourages the development of entrepreneurship. Chapter 3 examines the labor market outcomes of internal migrants in Vietnam with respect to the probability of finding jobs and earnings. This study emphasizes the role of social networks on job market outcomes, which is a largely neglected aspect of the labor market in developing countries. The results show that social networks play a positive and significant effect on the probability of finding jobs and earnings among migrants. Chapter 4 studies the effect of domestic and overseas remittances on the propensity to start a household business and the role of remittances on the growth of household businesses in Vietnam. This is a particularly important study to understand how varying sources of remittances drive the development of entrepreneurship an underlying factor for long-run economic development in Vietnam and in developing countries alike. The findings show that while domestic remittances play a positive and significant role in boosting the propensity to start a household business and in the growth of the existing household businesses, overseas remittances do not have any impact on business start up or business growth.

  • (2013) Yoo, Hong il
    Thesis
    This thesis consists of four essays on modelling and estimating unobserved consumer heterogeneity in microeconometric models of probabilistic choices and households demands. Incorporating such heterogeneity into these models potentially allows the researcher to infer more details on the underlying decision processes from the observed data. Each essay explores the extent to which estimated heterogeneity can help developing answers to a research question and improve the reliability of empirical findings. The first essay focuses on interpersonal heterogeneity in attribute non-attendance. Several studies estimate its incidence using a latent class logit model with pre-specified support points wherein the share of each point corresponds to the probability of ignoring particular attributes. This essay shows that because those points can be used to approximate unmodelled taste variation empirically, the interpretation of estimated shares is necessarily ambiguous. The second essay advances a new perspective on the problem of unstable coefficients in the rank-ordered logit model. This problem has been traditionally explained by intrapersonal heterogeneity, specifically that individuals rank less preferred items more erratically. This essay shows that the problem may originate instead from the model's sensitivity to stochastic misspecification in the postulated random utility function. Even a form of misspecification which is mostly inconsequential for the multinomial logit model can affect the rank-ordered logit model discernibly. The third essay compares stated preferences over nursing job attributes elicited by traditional and new types of discrete choice experiments, involving choices over jobs and attribute-levels respectively. Respondents are found to place greater value on pecuniary over non-pecuniary gains when completing the traditional choice task. The estimated pattern of taste heterogeneity suggests that the discrepancy cannot be explained by the typical conjecture that the more complex traditional task induces heuristic choices. The fourth essay explores the association between disability and unobserved intra-household expenditure allocation processes in a collective framework. This association may yield a refined measure of extra living costs resulting from disability. An analysis using Canadian expenditure data shows that the structural identification strategy in the state-of-the-art collective model does not generate robust quantification of this association.

  • (2012) Shen, Jianfei
    Thesis
    This thesis consists of three papers. The first paper is about voluntary provision of public goods, and the second paper studies elections when candidates are asymmetric and voting is costly. Finally, I discusses the equivalence between quasi-perfect equilibrium and sequential equilibria in the last paper. Chapter 1 considers the problem of collective actions. In an environment of voluntarily provision of public goods, we show that if the players are grouped according to their contributions and if their abilities to contribute are different, then there exist two positive contribution equilibria: one is fully efficient in the sense that all individuals contribute fully, and the other is near fully efficient in the sense that almost all individuals contribute fully. We consider the election problem in Chapter 2. Consider the following environment: An advantaged candidate and a disadvantaged candidate compete in a large election. Candidates exert effort to improve their valences, and voters cast their votes costly. This paper characterizes the pure strategy equilibria in this kind of election games, and gives sufficient conditions for the existence of pure strategy equilibria. We show that for most instances, there exists at least one and at most two pure strategy equilibria. On average a low voting cost causes high campaign efforts, but there also exists an interval of voting costs such that candidates' campaign efforts are strictly increasing on this interval. Moreover, when candidates become similar in terms of their productivity, their equilibrium valence choices also become similar. In Chapter 3 we prove the generic equivalence between quasi-perfect equilibrium and sequential equilibrium. Combining this result with Blume and Zame (1994) shows that perfect, quasi-perfect and sequential equilibrium coincide in generic games. Roughly speaking, this result tells us that if we pick an extensive-form game randomly, then the perfect, quasi-perfect and sequential equilibrium are equivalent for this game.

  • (2013) Elnasri, Amani
    Thesis
    This thesis studies a number of crucial topics in relation to infrastructure investments and their effects on economic performance. By focusing on the Australian experience, the thesis addresses several critical issues which have not received adequate attention in the earlier literature. Chapter 2 examines the relationship between public infrastructure and productivity by estimating a production function. The findings of this chapter suggest that while aggregate analysis produces an implausibly large infrastructure effect, results from an approach which controls for the specific characteristics of the states are more plausible. In another piece of evidence, the estimation of an error-correction model reveals that a long-run identification and modelling of the relationship reflects the important positive role of infrastructure on productivity. Short-run dynamics, however, provide no support for a positive effect. In addition, applying a causality test suggests a long-run unidirectional causality running from public infrastructure to productivity. Chapter 3 examines the impact of the provision of public transport infrastructure on the cost structure of Australian industries within a context that recognises interindustry spillovers. The study extends the symmetric normalised quadratic cost function by incorporating public transportation capital as an external input and adapting the spatial econometric techniques into an industrial context to allow for industry spillovers in the cost analysis. The study finds that while public transport has a productive effect in reducing the cost of production, neglecting interindustry spillovers noticeably reduces this effect. Chapter 4 examines the optimality of the provision of infrastructure using a system of Euler equations to represent intertemporal efficiency conditions. The estimation results suggest that dealing with individual types of infrastructure investments at the state level is helpful for reaching realistic conclusions about infrastructure provision. In particular, the study finds that while the efficiency conditions are satisfied at the aggregate level, a disaggregate analysis which examines individual components of economic infrastructure reveals inefficiency in the provision of some types of infrastructure across the states. In addition, contrary to other methods, the efficiency approach produces a relatively plausible estimate of the infrastructure effect.

  • (2013) Rai, Alan
    Thesis
    The first essay examines the ability of financial market illiquidity to predict key Australian and U.S. macroeconomic variables. I analyse whether illiquidity's predictive ability is state-contingent, drawing on recent theoretical work on the potential for a state-contingent relationship. Using a Markov regime switching model, I uncover strong evidence that the predictive power of illiquidity is state-contingent, with much higher predictability in states associated with historical periods of economic and financial stress. Furthermore, economic growth forecasts from Markov regime switching models that include market liquidity in the set of predictor variables are statistically better than forecasts from Markov switching models that exclude market liquidity. Gorton and Metrick (2010, 2011) argue that a run on the repo market played a key role in the collapse of shadow banks, while Krishnamurthy, Nagel and Orlov (2011) argue the collapse was chiefly due to a run on asset-backed commercial paper (ABCP). In order to assess the validity of these arguments, the second essay empirically examines the link between market liquidity and funding liquidity in various U.S corporate bond markets. Over the entire 2005-09 sample period, I find weak evidence of predictive ability among these variables. Where significant, repos are found to have higher predictive ability than ABCP. In addition, unsecured funding liquidity is found to have as much predictive ability as repos. These findings partially support Gorton and Metrick (2010, 2011), but do not support Krishnamurthy et al. (2011). I also find that the relationship between market liquidity and funding liquidity is state-contingent, a finding which supports the theoretical literature on the existence of nonlinear, regime-switching behaviour. The final essay assesses the impact, on credit market spreads, of the various unconventional policies introduced by the U.S. Federal Reserve, between mid-2007 and early 2009. I also examine the impact of fiscal policies announced during this period, as well as the stance of conventional monetary policy. I find that fiscal policy announcements exerted a significant and destabilising influence on market spreads. Furthermore, while the multitude of unconventional monetary policy initiatives were effective in reducing market spreads, the efficacy of these policies was undermined by the Federal Reserve's inability to achieve its macroeconomic objectives.

  • (2011) Zhu, Rong
    Thesis
    Since the beginning of the economic reforms launched in 1978, China has been in the transition from a centrally planned system to a market-oriented economy. This transition, accompanied with the rapid economic growth, has exerted profound effects on China's labour market. This PhD dissertation, consisting of three empirical essays, investigates the heterogeneous returns to schooling among Chinese urban residents, the distributional gender wage differential issue among rural-urban migrants and the wage effects of the mismatch between college major and occupation among recent college graduates in China. The three microeconometric labour studies provide new insights into the understanding of the wage determination, wage differentials and wage structure in urban China for different population groups during China's economic transition.

  • (2010) Restiani, Phillia
    Thesis
    This dissertation explores the issues of market design for emissions trading schemes by focusing on penalty designs and initial allocation mechanisms. Penalty design is defined in terms of penalty types and levels and the allocation mechanism compare free allocation with auctioning. The first essay employs a theoretical model to examine compliance incentives and market efficiency under three penalty types: the fixed-penalty rate (FPR), the make-good provision (MGP), and the mixed penalty design. Using a simple two-period model of firm’s profit maximisation, we analyse compliance decisions and the efficient penalty level under each penalty type. Our findings indicate that the penalty type does not affect compliance decisions provided that the efficient penalty level is applied. Market efficiency is retained regardless of penalty types. These findings are used as the hypotheses for the second essay. The behavioural implications of penalty designs on market performance are investigated in the second essay using an experimental method. Three penalty types and two penalty levels are enforced in a laboratory permit market with auctioning wherein subjects make compliance decisions by undertaking irreversible abatement investment decisions or by buying permits. In contrast to theory, we find that penalty levels serve as a focal point that indicates compliance costs and affects compliance strategies. The MGP penalty provides stronger compliance incentives than the other penalty types. Most importantly, a trade-off between investment incentives and efficiency is observed. Using a laboratory experiment, the third essay studies how the initial distribution of permits through free allocation or auctioning, may affect price discovery, allocative and static efficiency under the presence of three penalty designs. Price discovery is not influenced by the initial allocation mechanism. Permit prices remain above the efficient level due to the presence of irrational bidding and trading behaviour as well as risk aversion. Uncertainty regarding permit prices results in a modest allocative efficiency as over-investment prevails. Auctioning evidently generates higher static efficiency due to stronger price signals. This result supports the majority of literature which argues for auctioning. An appropriate auction design is crucial to avoid the risk of overbidding which will inflate the auction price and diminish efficiency.

  • (2011) Pullen, James
    Thesis
    A general Bayesian sampling method is developed that uses parallel chains to select between models and to average the predictive density over such models. The method applies to both non-nested models and to nested models, and is particularly useful for mixtures of complex component models, where a novel approach to overcome the label-switching problem is used. The method is illustrated with real and simulated data in model-averaging over alternative financial time series models, mixtures of normal distributions, and mixtures of smoothing spline models. In chapter 4 the method is extended to improve the efficiency of the sampling scheme. Mixture models are revisited in chapter 5 and compared to model averaging on simulated data sets and financial time series data. Chapter 6 applies mixture models to account for non-stationarity in time series data.